Yield underpins kiwi dollar

THE New Zealand dollar is little changed as the currency's relatively attractive yield helped underpin the currency in the face of heightened risk aversion among investors.

THE kiwi traded at 84.67 US cents at 5pm in Wellington from 84.60 cents at 8am, and 84.56 cents on Friday in New York.

The trade-weighted index edged up to 79.39 from 79.27 last week. New Zealand's currency has been a favourite among investors this year after a series of interest rate increases boosted its yield advantage over its peers. The yield on 10-year New Zealand government bonds was recently at 4.25 per cent, compared to 2.44 per cent on 10-year US Treasuries or 1.05 per cent on European government bonds. That advantage has limited the kiwi's 3.9 per cent decline over the past month as falling commodity prices and heightened geopolitical tensions sap investors' appetite for risk-sensitive assets.
"The kiwi seems to be somewhat immune to risk aversion," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "It points to the long-term yield advantage of New Zealand." The kiwi gained to 86.48 yen at 5pm in Wellington from 86.29 yen on Friday in New York, to 91.22 Australian cents form 91.12 cents and to 63.18 euro cents from 63.05 cents.

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